Sentence First, Verdict Later

Reminding one more of the Queen of Heart's court in Alice in Wonderland rather than the highest court in our land, the Supreme Court ended its 2004-2005 term critically crippling the property rights of red state America while dramatically augmenting the rights of blue state America.

In one case the Supreme Court eviscerated the time honored principle of property rights that your home is your castle. Instead it embraces in its place an ancient Carolingian-like doctrine that might best be described as "wealth ultimately returns to its rightful owner."

In the other case the Court greatly expanded the rights of digital and intellectual property holders far beyond what history and the founders would have anticipated. In fact, the Court went so far in doing so it was forced to rely on a discredited vicarious liability doctrine. The court applied a remedy similar to that of holding gun manufacturers responsible for criminal misuse of a firearm. In practice this result will lead to holding third parties responsible for infringements that they never engaged in.

Two decisions: one red and one blue. In the blue case, MGM v. Grokster, the Supreme Court ruled that if a manufacturer creates a product which can be said to "induce" an individual to illegally duplicate copyrighted material, new remedies will be allowed.

Essentially, damages will no longer be limited to just the individuals who actually make the illegal copies. Now, the manufacturer of the product or technology that the infringer used can also be held liable.

Guess who's likely to have more financial assets and thus more likely to get sued?

Such a decision-ostensibly to protect videos, rap music and the like from illegal copying-which departs from copyright precedent and tradition will ultimately rip apart the synergistic relationship between innovation and copyright protection. Why? Because by holding third parties accountable for the actions of law breakers without evidence of complicity, it raises the cost of protection higher than is efficient imposing on the technology industry duties and responsibilities that will discourage investment and innovation. Ultimately this ruling will lead firms to exit the digital technology arena as corporate counsels determine the surest way to protect a firm from these vicarious liability claims is to stay out of this field altogether.

On the other hand, in Kelo v. New London the Court moved us further away from the "red state" view of property rights by giving virtually carte blanche to local governments to seize, and demolish any person's home.